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Nigeria looks to agriculture for growth


Lamido SanusiThe cassava value chain is rapidly turning Nigeria into the world’s largest processor of cassava. It is anticipated that by 2015, the country will have more than 50mn tonnes of processing capacity, producing annually 1.3mn tonnes of high-quality cassava flour; 350,000 tonnes of starch, 250,000 tonnes of high fructose cassava syrup and 1.5bn litres of ethanol, matching the amount of ethanol Nigeria extracts from sugar cane.

“We must reduce our dependence on importation of wheat, sugar and corn starch — all of which can be partially or completely replaced by cassava substitutes,” Minister Adesina insisted.

Stimulating the agricultural sector and attempting to woo FDI into the sector remains a key objective of the federal government. There is perceived to be an increasing tendency for the giant multinational food companies to organise finance and agricultural expertise to African smallholder farmers in order to combat shortages and smooth out volatilities in the price of their inputs.

For its part, government has introduced legislation that, among other measures, stipulates a zero per cent duty on agricultural machinery and equipment imports such as the driers and mills that have already been imported for cassava processing; the removal of restrictions on areas of investment, and maximum equity ownership, by foreign investors; no currency exchange controls and free transfer of capital, profits and dividends; and a constitutional guarantee against nationalisation and expropriation.

Furthermore, there is a tax holiday for agricultural investments and infrastructure support, with a special focus on staple crop processing zones, for power, water and electricity.

As Minister Adesina observed, “[Achieving] a hunger-free Nigeria through an agricultural sector that drives income growth, accelerates achievement of food and nutritional security, generates employment and transforms Nigeria into a leading player in global food markets to grow wealth for millions of farmers.”

The state has been underpinning many of the agricultural reform and development initiatives and the Central Bank of Nigeria has taken a lead role in this process. Speaking at the New World Nigeria summit, the bank’s governor, Lamido Sanusi, outlined the NIRSAL programme, which he described as being driven by five pillars — particularly the risk sharing and technical assistance pillars.

Sanusi said the NIRSAL programme’s goal was to “expand bank lending in agricultural value chains". To de-risk the agriculture finance value chain NIRSAL has US$500mn in assets to stimulate Nigeria’s financial institutions investing in agriculture.

There is a risk sharing facility of US300mn that shares lending risks with commercial banks and an insurance facility of US30mn that links insurance products to the loan provided by the banks to loan beneficiaries; a technical assistance facility of US$60mn that will build the capacity of banks, micro-finance institutions to interact with the agricultural value chains and expand financial inclusion; an agricultural bank rating scheme valued at US$100mn that will rate banks according to their effectiveness of lending to agriculture; and what has been termed a US$10mn ‘bank incentive mechanism’ that targets incentives that move commercial banks to a long term, strategic position and commitment to agricultural lending.

The Nigerian government’s stance on promoting indigenous crops has already resulted in the launch in July 2012 of the Cassava Bread Development Fund to provide funding for both training and equipment for master bakers. Cassava bread, launched in November 2011, which contains 40 per cent cassava flour added to wheat, is already widely available throughout the country and retails for 60 per cent of the price of bread made with imported wheat.

Stephen Williams